Alexco gets green light to open mine

Alexco Resource’s Bellekeno mine should open by mid-October, following the Yukon Water Board’s decision last week to licence the project.

Already, approximately 155 workers are on site, two kilometres from Keno City, preparing the underground lead-and-silver mine and accompanying mill for production.

Once production starts, the mine is expected to employ 120 workers and to invest more than $25 million annually in labour, materials and supplies in the Yukon. And if the company’s plans succeed, the historic mine district will be bustling with activity for many years to come.

Alexco will use a conventional floatation mill to separate galena from dross. Twenty-tonne trucks will then haul the silver-lead concentrate to Skagway’s port.

The company aims to begin producing 250 tonnes per day, and to later ramp up daily production to 400 tonnes. To put this in perspective, the Faro mine produced as much as 20,000 tonnes daily, while Yukon’s only operating hardrock mine, Minto, has a mill that is roughly eight times the size of what’s being built by Alexco.

Bellekeno is expected to have a life of just three and a half years. But the mine is just the beginning of Alexco’s plans for the district.

“That three and a half years was just needed to get the mine started,” said McIntyre. “We know with a high degree of confidence we can do the same thing with other deposits.

“This is just what it took to get things going on the hill. All the old timers say, you guys will be there forever.”

Mines operated in the district for nearly 70 years, until United Keno Hill Mines’ operation closed in 1989. Over that period, miners extracted more than 217 million ounces of silver.

But none of these operations had the advantages of today’s technology and geological theories. “They never really had a long-term picture,” said McIntyre. “They just followed the veins.

“I think we’ll be there for a very long time.”

The company has already found promising extensions to Bellekeno. And it has its fingers in other nearby deposits. The surrounding district is home to 32 mines that produced ore.

Even work to lay a parking lot has uncovered glimmering galena. “Suffice to say, just about anywhere you go, it’s highly prospective from a geological point of view,” said McIntyre.

The company found a clever way to get its foot in the door of the historic silver district and begin earning money: it secured the federal contract to cleanup the mess left by bankrupt mining companies of yesterday.

Cleanup revenues helped finance Alexco’s exploration work. And its exploration work allowed the company to persuade Silver Wheaton Corp. to front $50 million (US) to help build Bellekeno.

Silver Wheaton serves as a middleman in the silver business. It buys the metal below market prices, through long-term contracts, and then sells silver to major industrial clients at a mark-up.

McIntyre envisions Bellekeno as simply a starter mine. It ought to provide a steady revenue stream that will help the company with its hunt for something big.

“We’re looking for the 100-million ounce deposit. That’s the ultimate target for the district. It’s another one of those very big deposits. So if we can mine some of the small, sweet-spot, high-grade deposits like Bellekeno, and provide cash for the company to explore and find the big one, that’s the strategy overall.”

The mine will initially consume several megawatts of power from Yukon’s grid. Work is now underway to unify Yukon’s two power grids, but the Pelly-Stewart line will only be needed when Alexco ramps up to producing 400 tonnes daily, said McIntyre.

The project won’t require power from the expansion of the Mayo hydroelectric project, he said. “Mayo B isn’t for us. It’s for the next guy.”

Another reason for Alexco’s success is found in the supportive relationship it struck with the Nacho Nyak Dun. The company and First Nation signed a benefits agreement in June of this year, ensuring that members of the First Nation receive their fair share of jobs and contracts from the project.

“You don’t really go anywhere when you’re at loggerheads with the local First Nation,” said McIntyre. “That’s pretty plain.”

But the project has faced vocal opposition from a band of Keno residents, who have come to enjoy the peace and quiet since the last mine fell silent 21 years ago.

Insa Schultenkotter used to do brisk business renting her cabin to German tourists, but not since heavy machinery began roaring by on a nearby road.

The water board acknowledged that local residents had concerns. But it’s job is only to regulate the quality of water. Noise is beyond its mandate.

And the Yukon Environmental and Socio-economic Assessment Board earlier determined that residents like Schultenkotter should have known when purchasing land in a historic mining district that industry may one day rev to life again.

Schultenkotter’s tried selling her cabin. But, so far, she’s found no buyers.

“We’ve been sacrificed so that a company from Vancouver can make as much money as it can possibly make,” she said.